AN EXPLORATION OF ETHICAL ISSUES IN U.S. FAST FOOD INDUSTRY Dr. C.Venkata Ramana 1, Dr. Balaji D 2 1, 2 Assistant Professor, SIBM-H, Hyderabad (India)
ABSTRACT The fast food segment of the restaurant industry has grown very large in many parts of the world, especially in USA and UK. Although fast food restaurants offer many advantages to customers in terms of service and availability, the industry is creating many problems to the society. The present study explores the business practices of the fast food industry with a focus on human resources issues. Some of the important issues explored in the study include ‘occupational safety’, ‘public health’, ‘service at fast food restaurants’, and ‘perception about the fast food industry’. The article also discusses some ethical issues associated with the fast food industry. The author concludes that the problems associated with the fast food industry can be solved if the firms make appropriate changes in their business practices. Also by virtue of the high profit margins enjoyed by firms in the fast food fast industry, fast food restaurants can deliver products and services of superior quality to consumers at a reasonable price. The author connotes some recommendations aimed at eliminating the problems plaguing the fast food industry.
Keywords: Fast Food, Ethics, Violations, Work Place, Restaurants.
I. INTRODUCTION
Over the past three decades fast food has evolved as a major segment of the restaurant business. Fast food segment has grown so large that fast food by itself has developed into a separate industry. The changing life style of people characterised by a hectic schedule has contributed to a large extent to the growth of fast food industry. Speed of service, convenience and round the clock availability of food has made fast food an attractive proposition for customers especially in western countries. A fast-food restaurant is characterized by at least three things viz. „food that is supplied quickly after ordering‟, „minimal service‟, „take-away and /or take-out service‟. Although various lobbies and customer advocacy groups are fighting against some of the unethical practices of the fast food companies, the industry is witnessing rapid growth in different parts of the world other than USA. Animal rights activists, vegetarian groups and labour welfare groups are some of the harsh critics of the fast food companies. The heavy mass media advertising directed at children and families has enabled the fast food companies to boost their sales and even grow very rapidly. In response to the harsh criticism from various consumer welfare groups, the industry has been trying to move the public away from that term over the past five years, shifting to the quick service restaurant (QSR). However, consumers still refer to the restaurants as fast food restaurants despite the industry‟s efforts to change them. Fast food restaurants need relatively small capital requirements and hence thrive well in areas with non-existent or poorly enforced health codes. While some of the top ten companies in fast food industry like McDonald, Burger King and Wendy‟s have been focusing on
201 | P a g e
hamburgers; other companies have focused on pizzas, chicken and salads. There has been a frantic growth of fast food restaurants in mid-1990s and currently the situation suggests that saturation is imminent. There is a misconception that fast food restaurants are a mark of modern technology culture. Fast food restaurants are very old with its style varying from culture to culture. The „bread-and olive stands‟ of ancient Roman cities, „noodle shops‟ of ancient East Asian cultures, „flat bread and falafel‟ represent the origin of the fast food industry. The modern fast food industry has been originated and evolved in USA. The history of modern fast food restaurants is connected with the history of hamburger, because the core product offered by the modern fast food restaurants was hamburger. White Castle was the first fast food company in USA, which started its operations in 1921. The big success of White Castle spawned numerous competitors. Two companies namely Burger King and McDonald‟s have contributed the most to the origin and evolution of the fast food industry. Burger King was founded in 1954 by James McLamore and David Edgerton. McDonald‟s was found in 1955 by Ray Kroc. Although the origin of Burger King and McDonald go back to almost the same year, McDonald attracted greater media attention. Ray Kroc‟s business acumen and his age contributed to the media focus that McDonald‟s gained during its early years of operation. The franchise concept adopted by McDonald‟s not only contributed to the growth and market share of the company but also to the immense publicity, which the company got since its inception. Prior to forming McDonald‟s, Ray Kroc was the world‟s exclusive agent for the Prince Castle Multi-Mixer. In 1954, Ray Kroc received an order for eight of the Multi-Mixers from a small hamburger stand in San Bernardino, California. Ray Kroc wondered about the restaurant that needed to make 48 milkshakes at a time. So he went out and saw for himself the operation of the small hamburger stand that ordered eight Multi-Mixers. Ray Kroc was impressed with the speed of the service and cleanliness. By 1960 Ray Kroc had sold some 200 franchises and bought out the McDonald‟s brothers. Even after getting control of the company, Ray Kroc did not change the name and continued the operations of the company under the name “McDonald‟s”. Burger King, which was originally called Insta Burger King was opened in 1954 in Miami, USA by James McLamore and David Edgerton. James McLamore and David Edgerton were alumni of Cornell University School of Hotel Administration. Just as Ray Kroc spotted a great opportunity after visiting the hamburger stand of McDonald brothers, James McLamore too sensed a great business opportunity after visiting the hamburger stand of McDonald brothers and decided to start his own restaurant. Some of the core products at Burger King are burgers, chicken tenders and fries. For most of its history, Burger king has been a division of a business conglomerate. Throughout its history, for a large period of time, Burger King has not been a free- standing company. The frequent replacement of CEOs at Burger King has given hardly enough time for the top management to develop a coherent growth strategy, let alone implement one. Since its inception in 1954 Burger King was acquired twice and merged once before it became a stand-alone corporation. Wendy‟s was founded in 1969 by Dave Thomas who was a former general manager at Kentucky Fry Chicken (KFC). The first Wendy‟s Old Fashioned Hamburger restaurant, named after Dave Thomas‟s youngest daughter Melinda Lou (whose nickname was “Wendy”), was opened at Columbus, USA. The origin of Wendy‟s was different from McDonald‟s and Burger King in at least two aspects, which are as follows: Dave Thomas, the founder of Wendy‟s worked in the restaurant industry since the age of 12 and was involved with the promotion of two restaurants („a four-restaurant KFC franchise‟ and „Arthur Treacher‟s Fish and Chips‟)
202 | P a g e
A serious disagreement with the policies of his employer (i.e. Kentucky Fried Chicken) and his childhood desire to start a restaurant had contributed to the creation of Wendy‟s. A list of major fast food companies in USA is presented in Exhibit 1 & the popular dishes mentioned in Exhibit 2.
EXHIBIT 1 EXHIBIT 2
MAJOR FAST FOOD COMPANIES IN USA LIST OF POPULAR FAST FOOD ITEMS
1 McDonald‟s 1 Hamburgers
2 Burger King 2 French Fries & Mashed Potato
3 Wendy‟s 3 Fried Chicken
4 Kentucky Fry Chicken 4 Sandwiches & Salads
5 Dairy Queen 5 Pitas
6 Jack in the Box 6 Nuggets
7 Arby‟s 7 Taco
8 Hardee‟s 8 Pizzas
9 Taco Bell 9 Ice Cream
10 Subway 10 Chilli & Chips
There are three basic business models in the fast food industry viz. Low Cost, Differentiation, Focus. See Table 1 for a comparison of three fast food companies in USA. Table 1: Comparison of Mcdonald’s, Burger King And Wendy’s
MCDONALD’S BURGER KING WENDY’S
Focus is on Standardization Focus is on standardization Focus is on Customization
Extensive network of franchisees Relatively less number of Relatively less number of franchisees franchisees
Speed of service is high. Speed of service is high Speed of service is low
Breakfast items are a significant Breakfast items are a significant Breakfast items are not a source of revenue source of revenue significant source of revenue
A strong brand name, Specialized menu and strong Specialized menu and quality are coordination of people and brand name are the major the main Strengths resources are the major strengths strengths II. LITERATURE REVIEW
There are a very few research works on the fast food industry and most of the studies focus on the labour issues, especially about wages. One of the important and probably most comprehensive research studies on the fast
203 | P a g e
food industry was done by Eric Schlosser. Schlosser (2001)1 describes the impact of fast food on American Society, which includes the following: Hastened the malling of American Landscape Widened the chasm between rich and poor Fueled an epidemic of obesity Propelled the juggernaut of American cultural imperialism abroad Ali Kera et al. (1995)2 in his study titled “Marketing strategies for fast food restraints: a customer‟s view, explains the marketing strategies in the fast food industry. The study estimates the future growth of the fast food segment in USA. The authors present consumers‟ perceptions of and preferences for fast food restaurants in the USA and Canada. Grant Rosenberg (2007)3 in his article Anti-Fast Food in France”, describes the change in the mindset of French consumers about food habits. The article traces the origin and evolution of a restaurant chain called Cojean, a former R and D director at McDonald‟s. The article emphasizes the fact that Allain Cojean‟s real passion is about food and intention to create something beautiful that had the best quality products and service. The author describes how Cojean differs from other restaurants. „Cleanliness‟, „Appearance and work habits of workers‟, „food items‟, „service at the restaurants‟ are some of the aspects that have been identified by the author, which gives a competitive advantage for Cojean over other large restaurant chains. The author highlights the change in mindsets toward healthier diets and lifestyles. Michael Fitzgerald (2007)4 in his article making Fast Food Even Faster, explores the role of technology in the growth of fast food industry. The article discusses issues such as „enhancing speed of service‟, „budget for technology in the fast food industry‟, and „venture capitalists‟ interest in restaurant technology companies‟. The article emphasizes that technology is not the first budget priority in the fast food industry. Food quality and restaurant image are the first and second budget priorities with technology a distant third. The author suggests that creating a market (including „technology for restaurants‟) takes longer that what one wishes it to be.
III. RESEARCH METHODOLOGY
The study is based on the author‟s knowledge and experience pertaining to the fast food industry in USA. The focus of the study was to explore the human resources related aspects of the fast food industry and consumer‟s preferences about fast food. Also one hundred and sixty individuals from different states in USA have been contacted by e-mail to collect information about various issues related to the fast food industry. The study also used secondary data through articles, industry reports and customer reviews. The following are some of the human resources issues that have made fast food restaurants a notorious place to work:
3.1 Work Place Hazards Work place hazards at fast food restaurants originate mostly out of the following: Equipment like fryers, grills, frosty machines etc. may cause bodily injuries in spite of careful handling Food Preparation Tables, Shelves, Racks that contain sharp and pointed edges Slippery surface, hot oil bins etc.
204 | P a g e
Irrespective of the proficiency that the employee has in handling and operative the equipment and /or Machines, it is hazardous to work in most of the stations at fast food Restaurants. Hazards are basically of three types. The first type of hazards arises by virtue of the design of a product or a process. The second type hazard arises during operations due to lack of competence of the worker or any other reason beyond control of the worker. A. Work Place Bullying: Work place bullying is an unwanted and unauthorized domination over co-workers (either physically or mentally) at the work place. Human resources consultants have been trying for long to tackle the problem of work place bullying in their organizations. Employees resort to work place bullying primarily to vent out their dissatisfaction, frustration and satisfy their ego. Stagnation in career, envy, attitude problem etc. are some of the major reasons by employees to indulge in work place bullying. In the fast food industry, it is common for the managers to ignore work place bullying. Mangers ignore work place bullying for at least the following two reasons. Fear of losing superior performers who may be resorting to work place bullying To control the slackness of the employees by encouraging workplace bullying. A few workers who involve themselves in work place bullying will observe and control the activities of other employees. B. Sexual Harassment: Sexual Harassment can be defined as unwanted sexual advances in the form of actions, gestures, words, threatening etc. that cause mental or physical agony to an individual. Most fast foods companies allow dating at the work place. This policy allows employees to seek intimacy with individuals of the opposite sex for physical relationship or friendship. The only exception to the policy of dating is that the relationship should not be between a superior and a subordinate. Sexual harassment is quite common in the fast food industry. Some of the consequences of sexual harassment are high employee turnover, disturbance, mental agony, arguments, tension, fear, and scuffles at the work place. The nature of work at a fast food restaurant, especially at back office, including storeroom, freezer, walk-in cooler etc. provides ample of scope to resort to sexual harassment and still not be observed by others. C. Dangerous Working Conditions: Any work environment that exposes individual danger that may result in physical or mental damage is called dangerous working conditions. In the context of fast food restaurants, some of the dangers are as follows: Handling hazardous things including chemicals, hot objects, fire etc. Working in inadequate space, crawling, bending and other irregular and abnormal movement. Lifting, carrying and stocking heavy objects through slippery surfaces like freezer and cooler. Cleaning, brushing, washing surfaces that may expose a worker to fumes rupture against sharp objects, etc. Staying in extremely cold or extremely hot conditions for a long time. D. Inadequate Pay: In spite of the high profit margins in the fast food industry, restaurant workers get a very low wage. The term “fast food” is generally viewed as low profile and low wage industry. The fast food industry has become associated with terms like “low profile”, “low wage” and “disenchanted employees”. Lack of motivation has been a problem in the fast food industry for a long time. Managers and Executives generally use non-monetary
205 | P a g e
incentives to motivate employees. The high turnover witnessed in the fast food industry is also the outcome of inadequate pay to the workers. In the contest of U.S., the two most common reasons mentioned by individuals to the question of why they are being unemployed are as follows: I don‟t want to flip burgers I am looking for a job not for work at a fast food restaurant The above mentioned reasons demonstrate the aversion people have for a job in the fast food industry and their perception about the working conditions and nature of work in the fast food industry. E. Poor Work Ethics: Unprofessional management is rampant in fast food industry. The following are the major aspects that constitute unprofessional management in fast food industry: Favoritism Inconsistent work procedures Uneven allocation of work among employees Favoritism is the tendency to exhibit bias towards a specific individual. Allowing to have free food giving long brakes than those that are normally allowed, supporting a specific employee, special treatment for a particular employee etc. constitute favoritism. Inconsistent procedures, involve deviation from the rules, procedures, processes etc. Inconsistent work procedures cause a variety of problems in the organisation. First, employees exposed to inconsistent work procedures are demotivated and don‟t strive to demonstrate superior performance. Second, inconsistent procedures give a poor impression about the company‟s policy and its ethics. Third, employees adopt the most convenient way of doing things rather than the right way of doing things. Uneven allocation of work among employees is yet another concern. In general, uneven allocation of work among employees arises in the following situations: Employees do not show up at the work place as per their work schedule. Managers intentionally allocate more work to an employee either because of an unexpected rush at the restaurant to compensate for the work left behind by employees who chose to leave early. F. Ethical Issues in USA fast food industry: Some of the ethical issues in USA fast food industry are as follows: 1. Marketing unhealthy foods 2. Misleading advertising 3. Enticing kids with advertisements and promotional items like toys 4. Not caring about employees physical and psychological well-being The super-sized Extra Value Meal at McDonald‟s contains 1,550 calories, which is about three-quarters of the food an average individual needs for a whole day. Many social welfare organisations and animal activists see fast food companies especially the top three viz. McDonalds, Burger King and Wendy‟s as abusive of animals, exploitative of workers, unhealthy, unecological, and ruthlessly profiteering. Fast food companies have found that flavor is the key to the attractiveness of fast food. Smell is a powerful sensation that helps shape psychology, and is strongly linked to memory. Fast food companies hire food scientists to study “mouth feel” and to adjust crunchiness, density and dryness, by using a range of fats, gums, starches, emulsifiers and stabilizers for food sold by them. Some fast food companies even hypnotise focus groups of consumers to reach
206 | P a g e
their innermost associations. Misleading advertising, targeting children with flashy and sophisticated advertising messages, luring children with toys also gives an impact. Certainly, fast food is marketed overtly to children. Social welfare organizations, customer advocacy groups, public health organisations etc. have been harshly criticising fast food companies for neglecting the following issues: Pay and benefits to workers Responsibility to the community Quality of products and services Job security to employees Openness Fairness Ability to attract, develop, and keep talented people Camaraderie/Friendliness G. Critical Violations: Critical Violations are considered a benchmark for judging a restaurant‟s cleanliness. According to Caroline Smith Deewal, “ a critical violation is something that happens in a restaurant that may result in the food becoming contaminated”. A critical violation may be defined as something that can make customers sick. Dateline, a U.S based organisation investigated the cleanliness of America‟s top 10 fast food chains by hiring a survey company. Dateline collected and examined health inspection reports for the last year and a half on each of those restaurants. Subsequently dateline used these health reports to find out which fast food chain in their survey are the cleanest and the dirtiest. The critical violations of various fast food companies are presented in Table 6. The common types of violations are presented in Exhibit 7. Table 6. Critical Violations of Top 10 Fast Food Chains5
S.NO. NAME OF THE NO OF RESTAURANTS NUMBER OF CRITICAL COMPANY SAMPLED VIOLATIONS
1. Burger King 100 241
2. Arby‟s 100 210
3. Wendy‟s 100 206
4. Hardee‟s 100 201
5. Dairy Queen 100 184
6. Jack in the Box 100 164
7. Subway 100 160
8. KFC 100 157
9. McDonald‟s 100 136
10. Taco Bell 100 91
207 | P a g e
Exhibit 7. List of critical violations6
EXHIBIT 7
MAJOR FAST FOOD COMPANIES IN USA
1 Dirty Food Preparation Counters
2 Rodent Droppings
3 Not having a trained and certified Food Handler
4 Improper food holding temperatures
5 Grime
6 Debris
7 Inaccurate thermometer
8 Base hand food contact
9 Food borne illness complaint
10 Improper hand washing
11 Uncovered food in the fridge
12 Scooping ice into a cup with bare hands
13 Non-edible objects in food
IV. RECOMMENDATIONS
The following are a partial list of recommendations, which if implemented properly will eliminate most of the problems that are plaguing the fast food industry: Provide a good compensation package for employees especially for crew persons and supervisors. and not just give minimum wages specified by government. Emphasise the importance of respect and courtesy among employees especially among the crew persons and supervisors. Make it clear to crew persons that bullying, use of offensive language, giving orders to co-workers arguing about procedures etc. will be considered a serious misdemeanor and is against the policy of the company. Avoid the practice of paying special attention and giving special treatment to employees in an attempt to retain them. This will create a bad work culture and spoil the spirit among the employees Avoid breaking rules and hanging procedures except in case of emergency. Do not allow any employee to carry packages, boxes and equipment that weighs more than 20 pounds. If a package, box or equipment that weighs more than 20 pounds has to be lifted or carried, help should be taken from other co-workers.
208 | P a g e
Outsource the store cleaning activity to a professional cleaning agency. This will enable employees to avoid getting hurt themselves during cleaning the store. Furthermore, crew persons can avoid the discomfort experienced during cleaning hoods, ceilings, and other places that are difficult to reach. Use for kitchen equipment like tables, grills stands racks that do not have sharp edges. Alternatively a protective covering around the equipment should always be placed. This will enable employees to avoid work place injuries. Use carpets wherever possible on the floor inside the restaurant this will ensure slips and falls can be reduced to the maximum extent. Allow customers to visit the various stations inside the restaurant (with prior appointments). This will boost the confidence of customers about the assurances made by the fast food industry as well as give them reliable information about the quality of food, cooking procedures, ingredients used, treatment of workers etc. Hire ethics officers to oversee ethical issues related to fast food industry especially marketing and human resources. Conduct an audit by a third party and publish a detailed report. Involve customers Advocacy groups, media professionals, and government officials in the process of the audit. Notify specify and inform the public about issues related to fast food menu like use of new ingredients, ill- effects etc. This will avoid unnecessary litigation as well as enhance the image and reputation of the fast food restaurants. Cooperate and collaborate with public health groups and nutritionists. Modify the menu and working conditions as per the local and cultural preferences and to meet the regulatory requirements
V. CONCLUSION
Although many problems are associated with fast food industry, which cause harm to the society, it is possible for the firms in the industry to rectify the problems and provide world class products and services. By virtue of the high profit margins enjoyed by the firms in the fast food industry, various groups, especially customers, employees and policy makers expect the best products and service from the fast food restaurants. The fast food industry should be guided by ethical business practices, social responsibility, and effectiveness. Under no circumstances, the fast food restaurants sacrifice effectiveness for the sake of efficiency.
REFERENCES
[1] Eric Schlosser, Fast Food Nation, Houghton Mifflin Company, New York. [2] Ali Kera et al. (1995), “Marketing Strategies for Fast Food Restaurants: A Customer‟s View”, International Journal of Contemporary Hospitality Management, 7(4), pp. 16-22. [3] Rosenberg Grant (2007), “Anti Fast Food in France”, Time, April 14, 2007. Available online at http://www.time.com. [4] Fitzgerald Michael (2007), “Making Fast Food Even Faster”, New York Times, October 28, 2007. Available online at http://www.nytimes.com 209 | P a g e